Drafting: No Defendant Left Behind

In Hoogland v. Kubatzke, the Michigan court of appeals addressed the issue of whom can benefit from a provision in an employment contract which shortens the limitations period for legal actions, including discrimination cases.  The plaintiff had filed an multi-count action in federal court against Delta College for discrimination.  The case was dismissed because of it was found to be barred by the shortened limitations period in the plaintiff's employment contract.

There were two provisions in the agreement which addressed the issue.  The first was an agreement that any suit or action against the college arising out of employment or termination from employment including claims arising under state or federal discrimination laws must be brought within 180 days of the event giving rise to the claim or be forever barred.  Any limitations period to the contrary was waived.
A second provision stated that plaintiff agreed that any claim or lawsuit against the college or any of its divisions must be filed no more than 6 months after the date of the employment action that gives rise to the claim.

Plaintiff filed a retaliation action against several college administrators in state court for retaliation after the  dismissal of the federal court action.  The trial court dismissed the cases on the basis that the contractual limitations period applied to all plaintiff's claims, regardless of the identity of the defendants. The court of appeals reversed.

The court of appeals stated in its per curiam opinion that the administrators were not parties to the contract.  The contract did not describe any other class of persons to whom the shorten limitations period applied.  The second provision clarified the scope of protection to which the employer was entitled and did not expand the list of persons entitled to protection under the shortened limitations period.  With respect to the argument that the defendants were third party beneficiaries to the agreement, the court stated that such an interpretation contradicts the clear and unambiguous language of the agreement.

The defendants argued that the lawsuit was barred by res judicata and collateral estoppel. The court of appeals stated that the federal court did not decide the underlying claims of discrimination---only the statute of limitations issue.

Under the court's interpretation of the language, the administrators should have been included with the language dealing with the college's other divisions.  Had this language been added, it is likely the court would have upheld the dismissal.  The language of an agreement include all possible defendants.  Indeed, no potential defendant wants to be left behind.

For additional Labor and Employment law insights from John Holmquist, visit the Michigan Employment Law Connection.

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